Latest news with #Melio
The Australian
4 days ago
- Business
- The Australian
Is Lessn Australia's Melio?
Xero's Melio deal proved payments are the prize Lessn raised big-time from serious backers Early days yet but traction is kicking in Special Report: As Xero writes a $3.9 billion cheque for Melio, eyes turn to the next potential rising star in the B2B payments space. When Xero announced in June it was buying US-based payments platform Melio for a staggering $US2.5 billion (around $3.9bn), the deal received plenty of attention. It was a bold, strategic swing at finally cracking the US market after years of trying. And the message was clear – the future of small business software lies in owning the money flow, not just the books. Melio, despite still being unprofitable, had traction. With $30 billion in payments flowing through its platform and a slick integration into accounting software, it became essential plumbing for small businesses. And for Xero, which had spent the better part of a decade laying groundwork in the US with limited success, Melio was the missing piece. Now, investors are asking: who's next? Heavyweight backers That question could well lead us back home – to the Sydney-based Lessn – a fast-scaling B2B payments platform some are quietly calling Australia's Melio. Lessn recently confirmed it had raised more than $1 million from a tight-knit crew of heavyweight investors. We're talking serious pedigree here, including: Michael Masterman (the man behind Element Zero and Twiggy-linked ventures), Dean Swan ( Asia Pacific), Brendon Cook (founder of oOh! Media), and Ian Lennie (Zepto Payments founder), just to name a few. It wasn't a public raise, and it didn't need to be. But it was heavily oversubscribed. 'We're backed by investors who understand what it takes to grow a FinTech at scale – and they believe in where Lessn is going,' said founder and Chief Growth Officer, David Grossman. 'This capital gets us to cash-flow positive and lets us keep building with focus. 'We're staying lean, staying fast, and staying laser-focused on delivering value to our customers.' So, what's the fuss about? Lessn isn't trying to reinvent accounting software. Instead, the platform wraps around it – plugging into platforms like Xero, MYOB and QuickBooks, then takes care of the grunt work using automation. Once it's connected, Lessn gets to work: moving money, handling payments, approvals, scheduling and reconciliation – all the clunky admin that tends to pile up on finance teams. It routes everything through a secure digital wallet, acting as a kind of orchestration layer between accounting and actual payment execution. It strips out the mess of ABA files and awkward card workarounds, and gives finance teams better visibility and control. Even suppliers who don't take cards can still be paid by card. For accounts teams, it's less chaos. For bookkeepers and small businesses, it's one less thing to wrestle with. And it's not just SMEs. Lessn's platform is being picked up by tradies, construction firms and property managers, all of whom have long been stuck in admin-heavy processes. It's also helping businesses handle everything from COGS and FX payments to everyday expenses with a single system. The roadmap is expanding fast, too. With the fresh capital, Lessn says it will be fuelling its hiring, shipping new features, and strengthening its product moat in a fast-moving payments ecosystem. Early days, real moves Lessn's month-on-month growth is currently sitting at around 30%, with users processing an average of $85,000 each per month through the platform. Those numbers may sound modest in Melio terms, but it's worth remembering where Melio started... and how quickly things can accelerate once product-market fit locks in. Behind the scenes, the team is clearly fired up. 'Lessn solves real problems for our customers in an inventive way, which is what inspired me to join the team – in what has been the most exciting move of my career,' said Annie Porter, the company's account management and sales support lead. 'Watching David defeat every single obstacle at a relentless pace is where the team derives their determination and belief in Lessn's future.' Of course, it still has a way to go before hitting Melio's $30 billion run-rate or attracting global M&A suitors. But the company is keeping things tight, building real customer traction and solving the kinds of problems most businesses still quietly put up with. Whether it ends up as Australia's next billion-dollar fintech or not, the runway looks long and the wind is at its back. This article was developed in collaboration with Lessn, a Stockhead advertiser at the time of publishing. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
Forbes
27-06-2025
- Business
- Forbes
Embedded Finance 2.0: Every SaaS Platform Wants To Be A Bank—Will Regulators Let Them?
SME owners are spoilt for choice for BaaS embedded SaaS solutions, but will regulators let it ... More continue? Last week, when Xero spent US $2.5 billion to buy Melio and weave Melio's bill-pay rails into Xero's cloud ledger, the accounting giant confirmed what insiders have whispered for months: the next payments land-grab won't be led by banks or flashy neobanks, but by software vendors whose day-one product had absolutely nothing to do with money. Toast began life hawking point-of-sale hardware for bistros; now Toast Capital quietly extends short-term working-capital loans to more than 100,000 restaurants. Shopify lets merchants swipe cards, stash proceeds in Shopify Balance, borrow against their receivables and, if Ottawa eventually blesses it, park deposits outright. Call it Embedded Finance 2.0, where the 'Pay' button graduates into a full on-platform treasury desk and the question morphs from Can we process a payment? to Should we hold your cash? The logic is seductive. Merchants already live inside these dashboards, so the data firehose is constant: real-time ticket size, refund velocity, day-of-week sales quirks. In a world where underwriting used to mean poring over last quarter's financials, SaaS firms now grant credit in minutes because they see tomorrow's revenue today. Small wonder analysts peg the embedded-finance prize at US $146 billion next year, compounding 36 percent to US $690 billion by 2030. That's not incremental revenue; that's venture-scale upside hiding in plain sight. Regulators Tighten the Screws Which brings us to the buzz-kill second act. Most platforms eager to bankroll their users don't actually own a banking charter. Instead, they 'rent' one from community institutions such as Evolve, Cross River or Sutton. That outsourcing made sense when your goal was a sliver of interchange. It looks shakier now that you're warehousing payroll and tax escrows. After the Synapse meltdown stranded end-customers without access to funds and a blizzard of fraud losses peppered the headlines, U.S. regulators decided that outsourcing the plumbing didn't mean outsourcing accountability. The FDIC has already slapped sponsor banks with consent orders demanding real-time visibility into fintech partners' ledgers, sharper BSA/AML controls and board-level oversight. Reuters soon reported that examiners were turning up, physically, in fintech offices to inspect controls firsthand, a move that effectively drags non-banks into the same supervisory perimeter as traditional lenders. Meanwhile, a fresh proposal would obligate sponsor banks to keep end-user balances at individual account level, eliminating the opacity that helped Synapse blow up. Banking lawyers warn the record-keeping cost could break the economics of low-margin BaaS deals, nudging software firms toward pricier state money-transmitter licenses, or the nuclear option of a national charter. Across the Atlantic, the Bank of England's Prudential Regulation Authority is poking at bank-as-a-service structures, while APRA in Australia refuses to water down prudential rules just so SaaS hopefuls can play banker. The thread that ties London, Washington and Canberra together is a simple phrase that keeps compliance officers up at night: regulatory crackdown. Survival Playbook for Embedded Finance 2.0 How do software founders thread this regulatory needle without killing the growth story investors are salivating over? First, the deep-pocketed few will likely chase full-fat charters. Intuit already controls an OCC-granted industrial loan company, and rumor has it Shopify is exploring a Canadian Schedule I license so it can plug directly into FedNow and CAD settlement rails. Owning the license erases sponsor fees, provides direct central-bank access and turns Fed holidays into just another dashboard metric. It also drags CEOs into capital-ratio land, where quarterly stress tests replace flashy conference-stage keynotes. Second, mid-tier platforms are furiously diversifying sponsors. Stripe quietly maintains half a dozen partner banks across continents; Adyen splits deposits between its European and U.S. charters so funds never cross jurisdictions. A multi-tenant model may mollify supervisors who now demand credible 'if-this-bank-fails' exit plans. It also means engineering teams must reconcile half a dozen core-banking APIs before morning coffee—a non-trivial tax on velocity. Third, a new generation of BaaS providers such as Unit, Treasury Prime, and Griffin, is selling compliance as the actual product: automated KYC, ledger-level reporting, FDIC-ready dashboards baked right into the API call. The value prop is clear—'Let us worry about Section 314(b) so you can focus on restaurant software'—but only holds if the RegTechs stay ahead of evolving rules. If they lag, their SaaS clients inherit the audit headache anyway. Lest we forget, heavier oversight could produce the ultimate plot twist: entrenching the very incumbents fintech promised to disrupt. Community banks, already sweating thin BaaS margins, might pull back, leaving only the megabanks able to swallow compliance overhead. Worse, chatter in policy circles suggests deposit-rate ceilings could surface to stop so-called 'shadow banks' from poaching deposits via juicy yield. That would freeze innovation exactly when the real economy could use cheaper credit lines. Investors haven't missed the knife-edge. Venture capital still sports bruises from 2024's BaaS flameouts, yet the deposit-plus-credit revenue multiplier looks too tasty to ignore. Boards are now forced into a binary decision: double down—pay up for ex-banker talent, spin up second-line compliance, turn ISO 20022 into a religion—or retreat to pure subscription margins and hope the competition does the same. No Bullet Lists - Just Reality Checks If Embedded Finance 1.0 merely added a Pay button, 2.0 aims to become the balance sheet. The platforms that survive will treat compliance as a feature, not a cost center. That means real-time ledgers auditors can query in a single GET request, FedNow and SEPA Instant wired in at the kernel, and credit models transparent enough that supervisors nod before shareholders cheer. SaaS founders used to brag about daily active users; tomorrow they might brag about their Liquidity Coverage Ratio. The irony would be delicious if it weren't so expensive. For all the hand-wringing, regulators may ultimately decide they can't afford not to let software companies be banks. Once embedded finance volumes crest half-a-trillion dollars, systemic stability demands oversight inside the platforms where money truly lives. The badge on your business debit card might one day read Shopify, Toast or Xero—but the compliance brain under the hood will need to think, grizzled and cautious, like JPMorgan. The real race in embedded finance is no longer to launch faster features, but to master risk so completely that regulators become partners rather than gatekeepers—and that contest has only just begun.
Yahoo
26-06-2025
- Business
- Yahoo
Xero to acquire B2B payments platform Melio in $2.5bn deal
New Zealand's accounting software giant Xero has agreed to acquire B2B payments platform Melio for $2.5bn in cash and equity. The deal includes additional contingent consideration of up to $500m over three years, which is tied to performance targets and continued employment. Melio, founded in 2018 and headquartered in New York with offices in Tel Aviv, Israel, serves over 80,000 US SMBs and accounting firms with accounts payable, receivable, and cash flow management solutions. The platform integrates accounting and payment processes, offering seamless workflows and a variety of payment methods to enhance visibility and control over cash flow. Melio also partners with financial institutions such as Capital One and Shopify, and distribution partners like Fiserv, enabling embedded accounts payable products for millions of small businesses through its syndication model. The acquisition aligns with Xero's 3x3 strategy, aiming to strengthen its US market presence by uniting accounting and payments into a single platform. Xero CEO Sukhinder Singh Cassidy said: "We're thrilled to announce we're acquiring Melio, a leading US B2B payments platform that strongly aligns with our 3x3 strategy and US growth ambitions. 'Adding Melio's world-class team, technology platform, and innovative A/P solutions to Xero enables a step change in our North America scale and the potential to help millions of US SMBs and their accountants better manage their cash flow and accounting on one platform. Upon completion, expected within six months pending regulatory approvals, Melio's CEO and founder, Matan Bar, will lead the combined US business, reporting to Xero's CEO. Bar said: "Joining Xero is an incredible opportunity for the Melio team to further our mission to reinvent the way businesses pay each other. 'Having worked closely with the Xero team, we're excited by our shared purpose to scale in the US and combine Xero's accounting capabilities with Melio's accounts payable and receivable solutions to create comprehensive product offerings for our collective, valued customer base." Last year, Xero purchased cloud-based analytics platform Syft while Melio secured $150m in a Series E funding round at a valuation $2bn. "Xero to acquire B2B payments platform Melio in $2.5bn deal " was originally created and published by International Accounting Bulletin, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Recorder
26-06-2025
- Business
- Business Recorder
Tech stocks drag Aussie shares lower as markets assess Xero's Melio deal
Australian shares slipped on Thursday, pulled down by tech stocks as IT major Xero dropped after announcing a deal to acquire U.S.-Israeli payments provider Melio Payments and a discounted share placement to fund it. The S&P/ASX 200 index lost 0.1% to 8,553.30 points by 0104 GMT. The benchmark had ended largely unchanged on Wednesday. Technology stocks on the local bourse dropped 2.7%, led by a 7% decline in accounting software major Xero when it resumed trade on Thursday, a day after announcing it would buy Melio for as much as $3 billion. The company with A$30 billion ($19.57 billion) market capitalisation asked institutional investors for A$1.85 billion to help pay for the purchase, with the placement representing a 9.4% discount to Tuesday's close. Xero went on a trading halt before markets opened on Wednesday, pending the announcement of a 'corporate transaction and an associated equity raising'. The deal was announced soon after. Analysts have given the deal a cautious endorsement. 'Xero's acquisition of Melio… comes with short-term earnings dilution, integration risks and heightened exposure to a competitive and evolving U.S. fintech landscape,' said Mark Gardner, CEO and Head of Equities Advisory at MPC Markets. Australian shares flat as banks offset mining drag; inflation data eyed Jefferies reduced its target price for Xero to A$176.90 from A$194.80, citing that Melio would still be '-12% dilutive to earnings on a per-share basis in FY28'. Bucking the trend, miners gained 0.3% as copper prices rose, supported by a tentative ceasefire between Iran and Israel. BHP and Rio Tinto added 0.4% and 0.2%, respectively. In company news, Australia's securities regulator appointed former central bank deputy governor Guy Debelle to an expert panel to investigate ASX's governance, capability and risk management frameworks. However, the bourse operator's stock rose 0.3%. New Zealand's benchmark S&P/NZX 50 index fell 0.2% to 12,432.41 points.
The Star
26-06-2025
- Business
- The Star
New Zealand's Xero to acquire Melio Payments
The cash-and-stock deal for Melio includes as much as US$500mil in additional performance and other payments over three years. — Bloomberg WELLINGTON: Xero Ltd, a cloud-based accounting software firm, has agreed to buy Melio Payments Inc for US$2.5bil as the New Zealand company pushes deeper into the US market with its biggest-ever acquisition. The cash-and-stock deal for Melio includes as much as US$500mil in additional performance and other payments over three years, according to a statement yesterday, confirming an earlier report by Bloomberg News. The combined business is expected to accelerate US revenue growth, possibly more than doubling Xero's group revenue by its 2028 financial year, it said. 'Probably the most critical to a build versus buy decision, you look at the competitive nature of the market and you work backwards for your ambitions and say look am I going to get there fast enough?' Xero chief executive officer (CEO) Sukhinder Singh Cassidy said in a phone interview. 'Once the platforms are integrated we can go after acquiring customers faster.' Melio co-founder and CEO Matan Bar will be responsible for the combined US business. Before creating Melio, he led PayPal's consumer peer-to-peer payments group. 'This is not a founder who's at his first rodeo,' Singh Cassidy said. 'He's already built one company to be a large global player, and stayed to realise the vision.' Melio's valuation hit US$4bil in 2021 after it raised US$250mil in an investment round co-led by Thrive Capital and General Catalyst. Last year, though, it was valued at US$2bil in a US$150mil funding round led by Fiserv Inc, according to a statement. 'Having worked closely with the Xero team, we're excited by our shared purpose to scale in the United States and combine Xero's accounting capabilities with Melio's accounts payable and receivable solutions,' Bar said. With offices in New York, Tel Aviv and Denver, Melio provides payments software to small businesses in the food, beverage and construction industries, according to its website. Xero provides accounting software for invoicing, payroll and other functions, primarily to small businesses. In addition to a home office in Wellington, New Zealand, Xero has a head office in Melbourne, Australia, plus other locations in both countries as well as offices in the United Kingdom, the United States, Canada, Singapore and South Africa, according to its website. The company's Australia-listed shares have gained 15% this year, giving it a market value of about A$30bil (US$19bil). Xero is New Zealand's biggest company by that measure, according to data compiled by Bloomberg. Singh Cassidy said she's very confident that Bar 'understands the complexity of running a business that's going to increase in scale inside a large organisation, while having the maniacal focus and passion and pace of a founder'. E&P Capital analyst Paul Mason said Xero's plan to purchase Melio could boost earnings from payments over time if it is successful at cross-selling the US-based company's service to its user base. — Bloomberg
